The 211-bed Avalon Southwest Health & Rehabilitation in Tuscon, Ariz., was recently sold for $15 million, or $71,000 per bed.
The SNF was owned by a group of investors in San Francisco, who leased it to Avalon Health Care. These investors sold the facility to a Chicago-based owner-operator with roughly half a dozen facilities in Missouri and Illinois, Evans Senior Investments (ESI) CEO Jeremy Stroiman told Skilled Nursing News.
ESI, which has offices in Chicago and in Boulder, Colo., represented the seller in the transaction.
The buyers are looking to turn around the skilled nursing facility, which had occupancy in the mid-70% range, from a profitability standpoint, Stroiman told SNN.
“Their plan is to raise occupancy, obviously working with local referral sources, [with] the hospitals,” he said. “Then they also plan on cutting expenses, specifically eliminating agency staffing that’s currently in the building.”
The facility, which was built in 1983, is located within a network of local hospitals, according to a release announcing the sale.
The price per SNF bed was above average for Arizona, Stroiman said, which generally has facilities sell for below $50,000 per bed. Some of the reasons for the above-average price include the building’s size, the chance to turn it around, and ESI’s “competitive” marketing process aimed at maximizing the value, Stroiman said.
Another factor is the building’s target population, which isn’t solely older residents.
“The building does focus on behavioral residents,” Stroiman told SNN. “In Arizona, there’s a very high Medicaid rate for behavioral residents.”
That rate is almost $300 a day for such residents, significantly more than traditional Medicaid reimbursements for skilled care, he said.
The purchase of the Avalon facility is the first entry into Arizona for the buyers.
Written by Maggie Flynn